June 18, 2010 / 6:48 PM / 10 years ago

Panama relaxes environmental, labor laws

* Law eliminates impact studies for public works

* Limits labor rights to strike

* Controversy could hurt Martinelli agenda

PANAMA CITY, June 18 (Reuters) - Some major Panamanian construction projects could begin without knowledge on how they might harm the environment and employers would gain an advantage in the event of a strike under legislation enacted this week.

President Ricardo Martinelli’s political allies in Congress passed the reforms in a move that could spur public works and please employers but increase opposition to the government’s infrastructure plans.

The string of varied reforms include allowing employers to hire non-union replacements for striking workers and requires police to immediately take control of work sites affected by strikes.

Martinelli, a white-haired supermarket magnate, took office last July promising ambitious public infrastructure spending but has been criticized for heavy-handedness and centralizing power.

The laws enacted this week sparked protests from labor and environmental groups who fear the fast-tracked legislation greatly reduces worker rights and could eliminate key environmental checks for major copper mines Martinelli wants developed.

The controversial reforms were bundled in a bill to increase investment in commercial aviation and were passed by Congress while their chamber was protected by riot police.

The so-called “9-in-1” law also increased penalties for human trafficking and false documents, but relaxed sanctions for police officers who commit crimes while on duty.

Martinelli has said critics misinterpret the law, which states that developments deemed to have a “social interest” could have relaxed environmental standards.

Opponents say they will challenge the legislation in court and analysts expect negative international reaction.

“This may expedite their ability to move forward on certain (development) projects but at the same time it could backfire,” said Heather Berkman, an analyst at the U.S.-based Eurasia Group, adding that some multilateral lenders cannot support projects without independent environmental impact studies.

Berkman warned the laws could further complicate U.S. ratification of a trade agreement with Panama and imperil Martinelli’s mining agenda.

“This could bring in international anti-mining groups which have made things quite difficult in other neighboring countries,” said Berkman.

Reporting by Elida Moreno; writing by Sean Mattson; Editing by Andrew Hay

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